Fund managers are like individual investors: Each seeks a maximum return on their investments. The performance of the sector should drive their participation.

After the financial meltdown of 2008, investors across the globe reduced the proportion of assets held in market-traded stocks and bonds. They instead chose to invest in real assets: minerals, real estate, agricultural commodities, other natural resources, art, antiques and classic cars among them. So what do real asset managers invest in now, several years later?

EveryInvestor.co.uk reported in mid-2014 that UK pension funds, which had rapidly reduced their allocations of equities in favour of alternative investment funds in the wake of the financial crisis, had slowed that exit in 2013. But the attraction to real estate, perhaps the most prominent in the real asset category, remains a strong driver for those funds. The pressing need for housing in the UK – an estimated one million households need a home to buy or rent due to underbuilding over the past two decades – is a significant driver. Along with homes, new infrastructure, schools, hospitals and commercial properties will be developed in the next ten years.

Real estate investments themselves come in many forms to satisfy this demand: raw land for development, homebuilding (and homebuilder stocks and bonds), as well as the transactional components (lending and legal services), are all growth industries in an ascendant economy.

Of particular interest to certain kinds of investors is strategic land, where acreage currently designated for one use (most often agriculture) is rezoned by local planning authorities for other uses such as homes and businesses. This is a large part of where value is created, but it’s no simple process. Strategic land investment firms have to first identify sites where housing demand is most pronounced and where local planning authorities may be predisposed to a land use change. The existing community has to be similarly given to development, the perceptions and processes of which development specialists need to manage as well. About half of all municipalities in England and Wales have a housing growth plan in place; for those that do not, it is beholden on the investor collective to make a strong case for how the community will benefit from an expanded town.

Just as individual investors need to determine if strategic land is the type of alternative investment they wish to be a part of, fund managers should apply their own criteria to this decision. Individuals are strongly encouraged to engage an independent financial advisor to weigh the risks, rewards and timing of a land development in their portfolio, even while professional investment managers rely on their own research, strategies and guiding principles.